The Swiss banking sector

The banking sector makes a significant contribution to the success of the Swiss financial centre.

The Swiss financial centre is one of the most competitive in the world and remains the global leader in the cross-border wealth management business. As at the end of 2018, there were 248 banks operating in Switzerland.

Varied financial centre

At the end of 2018, there were 248 banks operating in Switzerland.

Switzerland is the leader

The Swiss banks manage around 27 % of global assets managed cross-border.

Reliable employer

Around 60 percent of the banks surveyed expect the employment situation to remain flat in the second half of 2019.

The banks in Switzerland

At the end of 2018 there were 248 banks in Switzerland. The Swiss National Bank (SNB) breaks the banks in Switzerland down into 8 Groups.

Chart 1
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The economic environment in which the banks operate in Switzerland continues to be challenging: rising regulatory costs, persistent negative interest rates and restrictions to market access are impacting the framework conditions for these institutions. In light of the continuing decline in margins and the ongoing digitalisation of the financial sector, it is likely that the structural realignment in the banking sector will continue in the coming years. Despite the uncertain environment, the adjustment process and the economic challenges, the banks are developing solidly.

Switzerland requires the best possible, internationally recognised framework conditions in order to ensure that it continues to have a strong and internationally competitive financial market in future.

Bank net income

Aggregated net income in 2018 amounted to CHF 65.3 bn (4.6 %) in 2018. This is the highest level since the financial crisis of 2008. Within the balance sheets, interest income, despite the low interest rate environment of CHF 23.5 bn (–1.8 %), was the biggest contributor to net income. The success of the remaining business units has increased continuously.

Chart 2
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Banks’ aggregate business performance in Switzerland rose by 4.6 percent to CHF 65.3 bn in 2018 compared to the previous year. The annual profit increased by 17.3 percent to CHF 11.5 bn. 216 out of a total of 248 institutes generated a profit for the year. The Banks paid taxes of CHF 1.5 bn. Despite a continued decline in employment of 1.4 percent to 90,660 full-time jobs and the drop in the number of institutions by 5 to 248, the labour market in the banking sector is robust.

Chart 3
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Balance sheet business and employment at Switzerland’s banks

In 2018, the aggregate balance sheet total of all the banks in Switzerland decreased from CHF 3,249.4 bn to CHF 3,225.0 bn (–0.8 %). With an increase in balance sheet total of CHF 25.0 bn, the cantonal banks reported the greatest year-on-year rise, followed by the stock exchange banks (+CHF 4.7 bn), the regional banks and savings banks (+CHF 2.2 bn) and the “other banking institutions” (+CHF 0.3 bn). The private bankers (+CHF 0.1 bn) and Raiffeisen banks (+CHF 0.1 bn) also reported a slight increase. In contrast, a decrease was reported by the big banks (–CHF 45.7 bn) and foreign banks (–CHF 11.1 bn).

Chart 4
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Source: SNB

Even after the introduction of negative interest rates and the lifting of the minimum euro exchange rate, the banks in Switzerland continue to fulfil their role as lenders and financing partners to the full extent.

Chart 5
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The total outstanding domestic credit volume was CHF 1,174.7 bn in 2018. Of that total, CHF 164.6 bn were secured and unsecured customer loans (companies, public corporations and consumer credit), and CHF 1,010.2 bn was attributable to mortgage loans. Compared with the previous year, the total volume of credit in Switzerland rose by 3.9 percent in 2018. Domestic mortgage lending growth was therefore higher than in the previous year (2017: +2.7 %). Mortgage loans have increased by CHF 321.0 bn (+46.6 %) since 2008 and their share of the domestic credit volume has grown from 79.1 percent to 86.0 percent. Mortgage loans therefore continue to account for the largest share of credit volume.

Assets under management

The banks in Switzerland managed total assets of CHF 6,943.5 bn at the end of 2018. Compared with the previous year, assets under management decreased by CHF 348.4 bn (–4.8 %). The relative share of foreign customer assets remained almost unchanged at 47.5 percent. Switzerland remains the global market leader for cross-border wealth management: over one-quarter (market share: around 27 %) of global cross-border assets are managed in Switzerland.

Switzerland is the leader

The Swiss banks manage around 27 % of global assets managed cross-border.

Assets under management in Switzerland

CHF 6,943.5 bn

Almost half of the assets under management

come from abroad.

Overview of assets and investments under management

Banks in Switzerland had a total of CHF 6.9 tn of assets under management at the end of 2018. Domestic private customers with assets of up to CHF 0.5 m accounted for CHF 0.2 tn of this sum. A further CHF 1.1 tn of this figure comprises domestic customers with larger volumes of assets. In total, CHF 2.3 tn is managed in the cross-border wealth management business. Private customers in Switzerland and abroad hold 53 percent of total assets at banks in Switzerland. The other 47 percent of total assets under management amount to CHF 3.3 tn and are held by companies and institutional clients. The CHF 6.9 tn consists of CHF 1.1 tn of bank deposits and CHF 5.8 tn of securities.

Some of the assets in this country are managed via investment solutions created in Switzerland. A total of CHF 3.3 tn of assets is managed in the Swiss investment management industry. Collective investments under Swiss and foreign law as well as the discretionary mandates of institutional clients account for CHF 2.2 tn of this sum. A further CHF 1.2 tn are managed in the form of discretionary mandates of non-institutional clients as well as advisory mandates.

Chart 6
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Note: The assets held at banks in Switzerland are partly managed by the Swiss investment management industry and partly by customers themselves or by foreign providers. The Swiss investment management industry additionally manages assets held at banks abroad.
Source: SNB, BCG, IFZ/AMP, SBA

Employment at Switzerland’s banks

In 2018, the banks employed 90,660 people in Switzerland (in full-time equivalents), of which around 23,000 were employed in wealth management. The number of jobs fell by 1,240 jobs (–1.3 %) against the previous year. As in the previous year, part of this decrease can be explained by the fact that jobs were transferred to intragroup entities that are not included in the banking statistics.

According to SECO, the average unemployment rate in the Swiss banking sector was 2.3 percent in December 2018. It was thus 0.4 percentage points below the figure for the overall economy, which was 2.7 percent, and is therefore comparatively low. Overall, an annual average of 3,418 people were registered as unemployed in the banking sector in 2018, which corresponds to a reduction of 581 compared to 2017. Considering the major challenges faced by banks, the labour market continues to be highly robust.

The annual SBA survey on employment trends at the banks shows a slight rise in the employment figures for Switzerland for the first half of 2019. The number of jobs increased from 87,596 to 87,617 between the end of 2018 and June 2019.

Chart 7
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*Staff levels in Switzerland at the end of 2018 were lower according to the SBA survey than to the SNB statistics. The reason for this disparity is the response rate to the SBA survey. 215 banks in Switzerland were surveyed. The response rate was 71 percent, which represents 96.6 percent of staff levels at the banks in Switzerland.

NB: Number of responses: 153
Source: SBA employment survey (2019).

59.2 percent of the banks surveyed expect employment levels to remain unchanged in the second half of 2019, which corresponds to a decrease of 2.1 percentage points compared to the previous year’s survey. 25.7 percent of survey participants expect staff levels to rise in Switzerland and 15.1 percent expect to see lower levels. The bank representatives surveyed were therefore substantially more cautious with regard to domestic employment trends than one year ago.

Chart 8
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According to the monthly statistics of the State Secretariat for Economic Affairs (SECO), the unemployment rate in the banking sector in the first half of 2019 was unchanged compared with December 2018 and remained at 2.3 percent. The unemployment rate was therefore slightly above the overall average for Switzerland, which was 2.1 percent in June.

In Focus: Investment Management

In recent years, investment management, or the professional management of assets for institutional and private customers, has established itself as the central pillar of Switzerland’s finance industry and as part of its value proposition. In 2018, investments totalling CHF 3.3 tn were managed in Switzerland. This corresponds to about five times Switzerland’s gross domestic product. 34 percent thereof are managed for customers abroad. Investment management generates significant added value for the financial sector and real economy through the efficient allocation of capital and by ensuring efficient markets and the professional management of institutional and non-institutional assets. As a service provider for other banking segments, it is closely connected to wealth management and contributes to the comprehensive offering available to domestic and foreign customers in the Swiss financial centre.

Chart 9
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The role as an intermediary fulfils a central function in the Swiss financial centre. With an efficient capital allocation characterised by rational and meritocratic investment decisions, strong value creation and attractive jobs, investment management makes an important contribution to the efficiency of the market and the stability of the financial system. It is also responsible for the professional management of pension assets, which contributes to general financial stability.

Chart 10
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Sources: SBA and BCG
© SwissBanking 2020


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